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Bull of the Day: Sunrun Inc. (RUN)

There have been some in the solar community who believed that a Donald Trump presidency would spell doom for the sector, but this concern has begun to fade as of late. It is now perceived that President Trump will not repeal the Federal Solar Investment Tax Credit (ITC), and that the continued job growth in the sector will detour the new president from negatively impacting the industry. These are some of the factors in the decision to make Sunrun Inc. (RUN - Free Report) the Zacks Bull of the Day.

This Zacks Ranked #1 (Strong Buy) company owns, manages and sells residential solar energy systems. The Company provides solar service offerings through channels consists of direct-to-consumer channel, solar partner channel and strategic partnership channel. It also develops and sells mounting structures through the installation and distribution operations under the SnapNrack brand. The Company operates primarily in Arizona, California, Delaware, Colorado, Connecticut, Hawaii, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New York, Oregon, Pennsylvania and South Carolina, as well as the District of Columbia. Sunrun Inc. is headquartered in San Francisco, California.

Recent Earnings Report

On November 11th, management posted Q3 16 results where they crushed the Zacks consensus earnings estimate, and came in just short of the consensus revenue estimate. Specifically, the company posted a +137.2% positive earnings surprise, by beating the -$0.43 estimate with a +$0.16 actual EPS. Highlights of the quarter included; Total deployments of 80 MW (megawatts) an increase of 43% on a year over year basis, Net present value created of $76 million an increase of 53% on a year over year basis, and Creation cost per watt improved by $0.38 up 10% on a year over year basis. Further, during their conference call, management increased guidance for Q4 and FY 2016; management now expects to deploy approximately 80 MW, up from 77 MW in Q4, and for FY 2016 the company expects to deploy approximately 285 MW up from the range of 270-280 MW.

Management’s Take

According to Lynn Jurich, CEO, “We are pleased to deliver Q3 results that beat targets on customer installations, net present value and cost improvements, and to raise guidance slightly for the full year. We have achieved these targets by consistently executing our strategy of delivering the industry’s most valuable and satisfied customer base, aligning our product offerings with customer demand and taking share in attractive markets. We are proud to partner with our growing base of customers to lead a transition to clean energy that will grow for decades to come.”

Price and Consensus Graph

As you can see from the graph below, estimates for 2016, and 2017 are well above the current stock price.

SUNRUN INC Price and Consensus

Due to the strong earnings and upgraded guidance, earnings estimates for Q4 16, Q1 17, FY 16 and FY 17 have risen over the past 30 days; Q4 earnings improved from -$0.48 to $0.12, Q1 17 increased from -$0.32 to -$0.05, FY 16 jumped up from -$0.71 to $0.72, and FY 17 rose from -$1.94 to -$0.28.

Bottom Line

With the fears of President Trump’s new policies abating, the segment has a much brighter future outlook. Finally, Sunrun remains a top pick in the sector because of management’s corporate strategy, and the expansion of their strong customer base.

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